CBOT Closing Comments
Soybeans
July Soybeans closed at USD9.39 ½, down 1 ½ cents; July soymeal ended USD0.30 lower at USD273.60; July soyoil settled 6 points higher at 37.19. Record soybean production from Brazil and Argentina, plus US planting progress well above the five year average along with European economic woes paints a pretty bearish picture for bean prices. China however keep lurking in the background to lend some degree of support.
Corn
July Corn closed at USD3.59 ¾, up 3 ¾ cents; Dec Corn was at USD3.78 ½, up 4 ¾ cents. Rumours are that China maybe bought more US (and possibly Argy) corn over the weekend. With today's Chinese government auctions almost fully taken up at prices around USD6.50-7.00 it is hardly surprising that US corn may struggle to decline further from here.
Wheat
July CBOT Wheat closed at USD4.67 ¾, down 1 ¼ cents; July KCBT Wheat at USD4.88, down 2 cents; July MGEX Wheat at USD5.11 ¼, down ½ cent. The weakness of the euro continues to keep US wheat under pressure. Talk is starting to circulate that US wheat may not be in such a healthy condition as the USDA reports might suggest. The recent Kansas wheat crop tour appeared to confirm this.
London Wheat Rises On Production Jitters
November London wheat closed the day GBP1.15 higher at GBP107.40/tonne, with November Paris milling wheat EUR0.25 easier at EUR141.00/tonne.
After the long hard winter, a cool and dry spring isn't really what the doctor ordered. Temperatures have moved up the past day or two, and are forecast to bump up into the low to mid 20's by the end of the week, but there isn't much rain around.
What rain will fall in the UK is likely to be in the west, not where the bulk of the country's wheat producing areas are (or rapeseed for that matter).
France is also dry, yet strangely further east too much rain seems to be the problem (see here).
EU wheat was also underpinned by the weakness of the pound and euro on the forex markets. Inflation here is rising, contrary to BoE and ECB forecasts, that might prompt some to think that food commodities are a good anti-inflationary investment.
Certainly it looks like a decent bet that the pound and euro will continue to move lower against the dollar for the remainder of 2010. That shouldn't do EU export prospects too much harm.
The Black Sea will however inevitably be very aggressive marketeers once again, as soon as their new crop harvest kicks in just a few months away.
China: Show Me The Corn
The Chinese government's weekly corn auction managed to find buyers for just about all the corn on offer in the northeast of the country earlier today.
Of the 799,400 MT of corn on offer 796,700 MT found buyers at higher prices than last week's auction despite newly introduced restrictions on who can buy, and a ban on reselling.
It seems that all that this new buying criteria has done is, for those not allowed to buy at auction, to up their bids in an attempt to persuade farmers still sitting on stocks from 2009 to sell.
Hardly an effective way of reigning in inflation.
Government officials meanwhile insist that they have plenty of corn to sell and that there is no shortage.
If that was true, and quashing rising food prices was their main concern, then surely there is a very simple solution to all of this. It's not rocket science is it?
Super secretive China are supposed to have state reserves of around 50 MMT of corn, and have reputedly produced a crop of around 150-165 MMT in recent years. The problem with a crop of that magnitude is that a 10% overstate on just one season's production slashes 30% off their ending stocks. Just three years of 10% overstates virtually wipes out their "on paper" ending stocks entirely.
Or are you going to tell me that they wouldn't do a thing like that?
CBOT Ends Lower On Dollar Strength
Soybeans
July Soybeans closed at USD9.41, down 12 ½ cents; July soymeal ended USD2.90 lower at USD273.90; July soyoil settled 38 points lower at 37.13. A firm dollar and sharply lower crude oil pressured prices from the off. A benign weather situation saw the USDA reporting that soybeans were 38% planted this afternoon, that's well ahead of the five year average of just 5% and the fastest pace since 2005. Long range weather forecasts are warming up.
Corn
July Corn closed at USD3.56, down 7 cents; Dec Corn ended at USD3.73 ¾, down 6 ¼ cents. The USDA reported corn at 87% planted and 55% emerged, that's the fastest emergence since 2000. Today was also the first day that the USDA reported on crop conditions, saying that 67% of the crop was rated good to excellent. European economic fears, coupled with a strong dollar and weak crude oil weighed on prices throughout the session.
Wheat
July CBOT Wheat closed at USD4.69, down 2 ½ cents; July KCBT Wheat at USD4.90, down 1 cent; July MGEX Wheat ended at USD5.11 ¾, down 1 cent. US wheat continues to decline pressured by the strong dollar making exports uncompetitive. Spring wheat planting is 79% done, said the USDA. That's one point behind the five year average. Emergence is 55% versus 47% for the five year average. Winter wheat heading is behind the five year average at 52% compared to 56%. Winter wheat condition ratings were unchanged from a week ago at 8% poor/very poor and 66% good/excellent.
EU Wheat Closes Mostly Higher On Currencies
November London wheat ended up GBP1.15 at GBP106.25/tonne, November Paris wheat was EUR1 higher at EUR141.25/tonne.
A chronically weak euro (and to a lesser degree pound also) helped support EU wheat futures.
The pound slid to a fresh yearly low of 1.4255 against the dollar, whilst the euro broke below the 2008 low of 1.2328, falling to 1.2235 in early trade to set a four year low.
With little change to other wheat market fundamentals it's currency that is primarily driving the market at the moment.
Although there doesn't seem to be too much trade talk about it at the moment, there are possibly some concerns creeping in that many of the most productive parts of Europe might be in for at best only average yields this summer.
France, Germany and the UK have all suffered with a hard winter followed by a cold and largely dry spring. Conditions are said to be much better in Eastern Europe however, and as usual they will be first to aggressively market their new crop grain not too many weeks from now.
This will undoubtedly bring the usual harvest price pressure led by this contingent, so if you are hoping for significantly better prices you may have to wait until 2011.
Early Call On CBOT
The overnight grains closed with beans down around 5-6 cents, corn down a penny or so and wheat fractions either side of unchanged.
The dollar is up, although well off the overnight highs, and crude oil is weaker touching 8-month lows overnight.
European debt is the subject on everyone's lips, and what that might do for demand. Personally I don't see it making too much difference, but the market's perception of what it might do is more important right now.
China may have bought more US corn over the weekend, according to some reports. Their state-owned agency Cofco have already obtained customs clearance for the US corn that they bought last week, other reports suggest.
They seem to be setting themselves up to take more. Some reports also suggest that they may have bought Argy corn as well.
The USDA are out tonight with their latest planting progress report, corn is expected 90% complete. They will also report on corn crop conditions for the first time this season.
With corn almost all in, US farmers will now turn their attention to soybean planting. So far weather conditions have been largely ideal.
Early calls for this afternoon CBOT session: corn called 1 to 3 lower; soybeans called 5 to 7 lower; wheat called mixed.
I Like Driving In My Car
Mrs N#3 dragged me away from the computer for a few hours yesterday to go to a bloody garden centre the other side of Ripon. Flowers and stuff relating to flowers was all they sold, no plasma tellies or beer, nothing of interest to me. Apart from the lovely #3 I was the youngest person in there by about 20 years. So I had to amuse myself in the only way I know how.
"Lobelia, that sounds a bit like something else doesn't it?"
"Yes dear"
"Look at that enormous bushy Clematis. Clematis is a funny word isn't it, it sounds a bit like something else doesn't it?"
"Yes dear"
"Osteospermum! What does that remind you of?"
It kept me amused for half an hour anyway.
What did strike me on the way up there though was once again just how short most of the wheat crops were en-route. There wasn't as much rape in evidence as I thought there would be either. Almost all the rape was in full flower, but it frequently looked a little patchy.
Although it's forecast to warm up considerably this week (after three mornings of frost last week that will be surely welcome), it is set to remain largely dry. That won't help wheat catch up any, and the general shortness of it may mean it will have few stem reserves for filling the grain.
I can't see final wheat yields being any better than average at the very best this year. Indeed, as things stand at the moment, I'd say they will be pretty poor here in the north.
It could be worse though, a mate down in Devon tells me that one of his neighbours had his entire vineyard wiped out by frost last week.
Wiseman Milking It
Thrifty Scots-based Robert Wiseman Dairies have just released what they describe as a "very satisfactory" set of results for their financial year ending Apr 3rd 2010.
They're a bit more than satisfactory. Some of the highlights include sales volume of a record 1.77 billion litres and operating profit up by 43.1% to GBP50.3 million.
Operating margin per litre improved significantly to 2.84ppl from 2.17ppl in 2009, they say. That's right they're making almost 3 pence on every litre they handle.
A GBP6 million fine imposed by the OFT in 2007 (over unproven allegations of price-fixing) has now been reduced to just GBP4.2 million, they also gush.
There's no mention in their press release of passing any of these bumper earnings onto their suppliers in the form of a price increase however. You lot should just be thankful for having a milk buyer at all.
Discuss.
